Public Bill Committee

[Mr. Joe Benton in the Chair]

Clause 34 ordered to stand part of the Bill.

Clause 35

Duties in relation to social housing

Iain Wright: I beg to move amendment No. 109, in clause 35, page 15, line 12, leave out from ‘HCA’ to end of line 14 and insert
‘acquires, constructs or converts any housing or other land for use as low cost rental accommodation’.

Joe Benton: With this it will be convenient to consider Government amendments Nos. 110 to 114.

Iain Wright: Good morning Mr. Benton, it is good to see you back in the Chair. May I wish a good morning to all members of the Committee.
I realise that this is not a clause stand part debate, but I shall briefly set out the background. Clause 35 is needed as a result of the split of the |Housing Corporation’s regulatory and investment functions. Therefore it requires that this new investment body, the Homes and Communities Agency, takes steps to ensure that low-cost rental accommodation provided as a result of its activities is adequately regulated.
While we would normally expect the agency to provide low-cost rental accommodation indirectly—a debate that we have had already during the course of the Committee’s deliberations—in the ways described in clause 35(3), (5) and (7) the agency will be able to provide low-cost rental accommodation directly. Amendment No. 109 relates to this direct provision by the agency. It makes it clear that, when the acquisition, construction or conversion activity by the HCA is intended to result in low-cost rental accommodation, the agency must ensure that a relevant provider of low-cost rental accommodation is the landlord when it is made available for rent.

Lembit Öpik: Does that mean that the Government intend the HCA not to end up operating as a landlord to tenants at any time?

Iain Wright: It is in the scope of the agency’s powers to act as a landlord, but I had an earlier debate with the right hon. Member for North-West Hampshire about this matter. The anticipated main focus of the agency’s activities would be to assist work in partnership with others—registered providers, councils, or whatever—in that respect, rather than actually being a direct landlord itself. But the scope and flexibility is there for the agency to do that.
The Homes and Communities Agency can dispose of housing or land to a person, provide infrastructure to a person—which we debated in clause 7—or give financial assistance to a person, on condition that the person “provides low-cost rental accommodation”. Where the agency does this, it must ensure that, where the accommodation is made available for rent, the landlord is a relevant provider—as defined in subsection (9).
Amendment No. 110 defines and clarifies the phrase “provides low-cost rental accommodation”, for the purposes of this clause. It means to construct, acquire or convert accommodation for use as low-cost rental accommodation, or ensure such acquisition, conversion or construction by another. Amendment No. 110 will effectively define “provides low-cost rental accommodation” when this is not done directly by the HCA. We thought it important to clarify what is meant when someone other than the HCA is commissioned to provide the accommodation. This is especially the case where the term “provider” bears a different meaning in part 2.
Clause 35 requires the Homes and Communities Agency to ensure that the landlord of low-cost rental accommodation provided as a result of its activities is a relevant provider as defined in subsection (9). Amendment No. 111 amends the definition of ‘relevant provider’ to include arm’s length management organisations or other entities controlled by a local authority, as well as a local authority or a registered provider. At present, ALMOs have managed only housing owned by the local authority. ALMOs—I have spoken to them and think that they are an exciting model—are increasingly interested in owning stock themselves. The agency could provide financial assistance, infrastructure or land to an ALMO for it to provide low-cost rental accommodation. This amendment would allow the ALMO to be the owner when the agency-funded accommodation is made available for rent.
The other amendments in this group are not strictly speaking related to this clause. Government amendments Nos. 112 to 114 relate to clause 36, which gives the Homes and Communities Agency powers to require the repayment or recycling of social housing assistance. These powers broadly re-enact the Housing Corporation’s powers in relation to recovery and recycling of social housing grant. As the agency has a general financial assistance power rather than specific grant powers limited to social housing, we need to define when the grant-recovery and recycling powers are available to the agency. We do not want these powers to be available in relation to financial assistance given by the agency for other purposes. For financial assistance given for purposes not related to social housing, we think that ordinary grant conditions suffice. However, the flexibility given by clause 36 is needed for social housing assistance.
Clause 36(8) defines social housing assistance as
“financial assistance given under section 22 on condition that the recipient provides social housing (whether by itself or as part of a wider project).”
Government amendment No. 112 defines “provides social housing”. The definition of “provides” is wider in this clause than in clause 35 because we think it appropriate for the agency to have the grant-recovery and recycling powers for grants given for a wider range of activities, including improving or maintaining social housing.

Nick Raynsford: I do not want to anticipate the debate on the subsequent set of amendments, but it does seem peculiar that there is this proper definition of social housing in relation to clause 36, but that does not apply in relation to clause 35. That seems to be working entirely against the principle of achieving mixed-tenure developments and greater flexibility in tenure and not dividing the home-ownership sector from the rented sector. I cannot understand why the formulation has applied in clause 35, which is more restrictive.

Iain Wright: I understand my rt. hon. Friend’s point, and I do not want to pre-empt the debate that we are to have in a moment. The way I see the shaping of his amendments is that we need to be careful to have the most appropriate level of regulation. I think that that is the theme that will emerge from his amendments.
Government amendment No. 113 adds to the index of defined provisions for the purposes of part 1—in clause 60 a cross-reference to the definition of “provides social housing” in clause 36(8). Government amendment No. 114 clarifies the definition of arm’s length management organisations by reference to the local government legislation which defines when bodies are controlled by local authorities. ALMOs cannot, for the time being, register with the regulator as a provider of social housing, although, as the Committee will be aware, the Government intend to bring local authorities within the scope of the regulator within two years. For the time being, to avoid confusion and duplication, we have specifically excluded both local authorities and ALMOs from registration. As clause 35 makes clear, however, this does not prevent them from receiving financial assistance for social housing.
I hope that I have clarified the position with regard to the amendments.

George Young: I want to press the Government on amendment No. 109 because I am not sure that the Government fully understand the depth of concern within the housing association movement about the duties set out in clause 35 and in particular those set out in subsection (1), which Government amendment No. 109 effectively rewrites. This debate is to some extent the other side of the coin of the debates on clause 8 and clause 5. Those clauses dealt with the powers of the HCA, and the debate this morning is on the duties.
The defence that the Minister deployed when he defended the powers of the HCA is not available to the same extent when we deal with the duties because one can deploy the argument that certain powers are needed if X happens. That defence is not available when one addresses what are the duties and the functions, or indeed the business of the HCA as set out in chapter 4. The Minister did not convince me last week that the HCA would not have a much more interventionist role than the Housing Corporation has had to date. Let me remind him of what he said:
“I anticipate that that will not be the primary way in which it will support housing growth.”——[Official Report, Housing and Regeneration Public Bill Committee, 10 January 2008; c. 207.]
He said that in the context of what the HCA would do, but it did not give the housing association movement the reassurance that it was hoping for. He then had another go at column 216, but that did not take the trick either. He made it clear that the option of development was there, if the agency so wished, adding:
“However, where the circumstances demand, the agency will be able to take a direct role if it so wishes.”——[Official Report, Housing and Regeneration Public Bill Committee, 10 January 2008; c. 216.]
When we turn to chapter 4, which deals with the HCA’s functions in relation to social housing, however, we find that the first such function, which is set out in clause 35(1), relates to the circumstances in which the HCA itself
“acquires or constructs low cost rental accommodation”—
a provision that the Government now propose to replace through amendment No. 109.
The Minister may revert to what I call his model defence, which is that the clause is modelled on previous legislation. Were he unkind—he is not—he would refer to the Housing Associations Act 1985, which sets out the functions of the relevant authority, which, in that case, is the Housing Corporation. Section 75(e) of the Act refers to the relevant authority undertaking “to such extent as” it “considers necessary, the provision” construction, acquisition and conversion of dwellings. If the Minister were really unkind, he would ask who put that measure on the statute book, but he is not and he would not dream of doing so. However, the relevant point—perhaps he can address this—is whether the Housing Corporation has ever used the powers in section 75 of the 1985 Act, which are replicated in clause 35 of the Bill. My understanding is that it has never done so.

Nick Raynsford: I share the right hon. Gentleman’s view that it is quite unlikely that the powers would be used in the framework of the existing Housing Corporation. However, the Bill creates a framework in which the corporation is merged with English Partnerships, which has land acquisition and development roles. The likelihood of the circumstances that the right hon. Gentleman describes applying will therefore be greater. Is that not a relevant consideration?

George Young: I would stand that argument on its head and say that while English Partnerships may have needed those powers, the new body does not because it incorporates that part of the Housing Corporation that had a direct relationship with housing associations, which obviates the need for English Partnerships to be able to provide housing directly. If the Housing Corporation never used those powers, the Minister must make the case as to why the HCA, the new body—as the right hon. Gentleman said, it is a different body—also needs them.
If clause 35 goes through unamended, there is a real risk that it will change the existing relationship between the Housing Corporation and the housing associations. The Housing Corporation is not a competitor to the housing associations; it is an enabler, provider and funder. Under clause 35, however, it will become a competitor. To put it differently, it is rather like one’s father suddenly dating one’s girlfriend—it totally changes the nature of the relationship and someone who was a benevolent provider of funds is then seen as a direct competitor.
The HCA will have a whole range of information available to it, so it will be in a privileged competitive position; it will know what the housing associations plan to spend on buying and developing a site. With that privileged information, it will be able to undertake the duties in subsection (1), as amended, to do it all itself. When the Minister replies, I want him to recognise that there is concern in the housing association movement about these powers and about the possibility that the HCA will become a competitor. Will he go further than he did in his earlier contributions to reassure the movement that the powers, if used, will be used sparingly and only if there is no alternative means of developing and providing social housing? Will he assure us that the powers in the clause relate not to the broader powers of English Partnerships but solely to social housing? That responds in part to the point made by the right hon. Member for Greenwich and Woolwich.
Can the Minister, first, recognise the concern and secondly, go far further in assuring me and the housing association movement that the good relationship between the corporation and the movement will not be changed by the HCA’s enthusiastic use of the powers in amendment No. 109?

Iain Wright: I enjoyed the questioning from the right hon. Member for North-West Hampshire. I would like to probe him further on the point about his father and girlfriend situation, but now is not the time—perhaps when the Committee is over and we are having a drink in the bar. I am clear about what the agency will do, and I hope that I can reassure the right hon. Gentleman. I am not certain I will be able to do so, because this is essentially a rehash of a debate we had on an earlier clause—clause 7, I think. The direct question from the right hon. Gentleman was about whether the agency would be building homes itself and, in effect, acting as a competitor to the housing association sector. The right hon. Gentleman should look at where we have come from. It is not my understanding that the Housing Corporation or English Partnerships have been involved in directly building homes in the recent past. I am not certain whether it happened a long time ago or if it happened at all.
I reiterate what I said to the right hon. Gentleman in the debate on the earlier clause; the powers are there for the agency to use, if they so wish. We see the agency’s role as facilitating, enabling and providing the skills necessary to help the RSLs, councils and other providers to step up to the plate and build houses. In our previous sitting we were discussing a culture change in the agency. It is important that we increase and accelerate the number of houses built, but even taking into account that culture change, I do not genuinely think that the agency will use its powers to provide housing directly, other than sparingly—to use the right hon. Gentleman’s words. More, it will act in partnership as a facilitator or an enabler for RSLs and others to do that job.
It goes back to a similar point about becoming the local planning authority and opportunity costs to the agency and what it could do with its resources, both staffing and financial. It can achieve an awful lot more by working in partnership and acting as a facilitator and enabling rather than directly providing. The power is there; we require the flexibility in the Bill, but I do not think that the power will be used frequently.
I hope that the right hon. Gentleman appreciates that clause 35 is a good thing. It ensures that low-cost rental accommodation is provided through registered providers and, therefore, can be regulated. As we come on to a subsequent part of the Bill, we see that we will be able to raise standards through the regulator.

Margaret Moran: Will the Minister give us examples of the way in which he foresees that the HCA might develop itself? I understand that there might be emergency situations in which it might need to develop, for example, if an RSL was failing. Can he give us specific examples and clarify whether the HCA will retain funding for itself rather than dispersing it for precisely this objective?

Iain Wright: It is difficult to envisage circumstances in which the agency will directly provide housing. I anticipate that it would be to provide confidence to the wider market. For example, it might enable a few units to be built to show what a development could look like, which might encourage other providers to come in. I imagine that it might do things at the start of a process to inspire confidence in the market. It might take action to get developments that are difficult to establish off the ground—quite literally. It is in those circumstances that I imagine the agency using a range of powers, of which the power directly to provide housing could be one. I hope that I have reassured my hon. Friend on that. I am happy for her to intervene, if she needs further clarification.

Margaret Moran: Perhaps the Minister can address the second point that I made on retaining funding for itself for that purpose.

Iain Wright: I understand the point and in that respect it would be building directly the units and therefore would be funding those units. I imagine that at some point it would want to provide that unit to a relevant registered provider—a housing association. I hope that that provides reassurance to my hon. Friend.

Robert Syms: The Minister may remember that there were problems with the Canary Wharf development. It went into liquidation and then was restarted. If a similar development got into financial difficulty, would the agency have the power to take it over, with the prospect of selling on or getting somebody else interested in the development? Would it be able to go broader than the housing remit, if there were office or commercial developments within a site?

Iain Wright: I draw the hon. Gentleman’s attention to clause 2(1), which says that the objects of the agency are
“(b) to secure the regeneration or development of land or infrastructure in England, and
(c) to support in other ways the creation, regeneration or development of communities in England or their continued well-being”.
So yes, it would certainly be able to do so in the circumstances that the hon. Gentleman outlined.
I hope that I have answered all the Committee’s questions.
 Sir George Young rose—

Iain Wright: I see that I have not.

George Young: We have made substantial progress over the past week because the Minister has retreated from the earlier trench, which was that providing housing would not be the agency’s primary objective and that it would be able to take a direct role if it so wished. He has retreated from that to what he said just now, which was, “I think these powers will be sparingly used”. Then he went into a different trench, when he said that it was “difficult to envisage the circumstances in which—” they would be used. So a lot of progress has been made.
I have no objection to the rest of the powers which enable the HCA to fund other organisations and I hope those will be used and produce the same sort of output that was being produced some 10 or 12 years ago. I think that the National Housing Federation will want to reflect on the exact words that the Minister used in his response to see if it gives them the assurance they are looking for that the HCA will not use its powers to emerge as a direct competitor to housing associations. On that basis, I would not dream of seeking a Division on the Government amendment.

Iain Wright: Perhaps I should not try to catch your eye, Mr Benton, when I am on a good thing. I am pleased that the right hon. Gentleman is reassured, but I do not think I have changed my position. We have always said that we expect that the primary function will be to enable others to step up to the plate in order to improve the supply of housing in England, and that the power to provide housing would be used sparingly, so I do not think I have been inconsistent. We would expect the agency to act as a partnership, but I am pleased that the right hon. Gentleman is reassured. Before I go into another trench, I think I had best sit down.

Amendment agreed to.

Nick Raynsford: I beg to move amendment No. 51, in clause 35, page 15, line 13, leave out ‘low cost rental accommodation’ and insert ‘social housing’.

Joe Benton: With this it will be convenient to discuss the following amendments:
No. 52, in clause 35, page 15, line 15, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 53, in clause 35, page 15, line 19, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 54, in clause 35, page 15, line 21, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 55, in clause 35, page 15, line 25, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 56, in clause 35, page 15, line 27, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 57, in clause 35, page 15, line 30, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 58, in clause 35, page 15, line 32, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 59, in clause 35, page 15, leave out line 38 and insert
‘“social housing” has the meaning given by section 67.’.

Nick Raynsford: As we have already established, the clause to which these amendments relate is likely to have a limited application. The right hon. Member for North-West Hampshire conceded that the Government in which he served as a Minister put this provision in the Housing Associations Act 1985, so they envisaged circumstances in which it might apply, and that remains the case.
It is likely, as the powers of the Housing Corporation are being combined with those of English Partnerships, that there will be circumstances in which the agency, as part of its role in development and supporting regeneration, may wish to be a partner in a development, possibly with a private developer. It could perform this function before transferring the property across to an appropriate housing association or other body to manage. There may be more circumstances in which this would apply, but as my hon. Friend the Minister has made clear, these will probably be relatively limited in number.
The problem is why the clause has been written in a way that limits the provisions to cases in which low-cost rental accommodation is involved. In practice, the rest of the Bill is based on a formulation of social housing which embraces both low-cost rental housing and low-cost home ownership.
Clause 67 defines social housing as
“(a) low cost rental accommodation (defined by section 68), and
(b) low cost home ownership accommodation (defined by section 69).”
It seems odd that in clause 35, which is headed “Duties in relation to social housing”, not low-cost rental housing, the definitions are all limited to low-cost rental. There must be some purpose behind this. It is all the more odd to me because it runs completely counter to our understanding of the importance of mixed-tenure developments, in which one does not have rigid divisions between certain types of tenure—rented in one place and owner-occupied in another.
We understand that there is a need for greater flexibility, for people to be able to move between the rented sector and the ownership sector, possibly by means of low-cost options on the way. That is very much part of the current thinking. The Government are also strong in their advocacy of mixed communities. That does not seem to fit comfortably at all with a provision under the heading “Social housing”, which is clearly limited to only one part of that social housing.
We also know from experience that integrated management of new developments, where there is mixed tenure, is often critical to the success of those developments. If there is fragmented management, with different bodies managing different parts of the housing in an estate, there is a greater likelihood either for confusion or for lack of clarity and a failure to deal with problems as and when they arise. All good thinking at the moment is very supportive of integrated management. That all argues rather forcefully in favour of an approach that does not separate out provisions in relation to low-cost rental accommodation from provisions for low-cost home ownership.
A clinching argument can be found in clause 70, which is entitled “Shared ownership low cost rental”, and is very germane indeed. The clause states:
“Accommodation which is both low cost rental accommodation and low cost shared ownership accommodation is to be treated as the latter and not as the former.”
Therefore, if one has a combination of low-cost rental and low-cost ownership, it is to be defined as low-cost ownership, not low-cost rental. Why on earth are the Government seeking in this clause to apply these provisions only to low-cost rental rather than to the whole social housing field? That seems to be a pretty convincing case.
If one looks at this slightly further and thinks about the limited circumstances in which these provisions might apply, I can see all sorts of scope for perverse incentives if the formulation currently in the Bill is not amended. That is why I have tabled these amendments. Let us take, for example, a circumstance in which the agency, in partnership with a private developer, is undertaking a regeneration project to achieve the regeneration of an area in need of investment. That private developer says, “I don’t want any low-cost rental housing on this development. I want it to be a nice, upmarket development, with housing for sale and low-cost home ownership, but I do not want social rented housing.” Under the current provisions, that developer would have a rather persuasive case. It could say to the agency, “Let’s keep this development such as to exclude social rented housing. That way we won’t have to engage a provider of social housing in the management of it. As the developer, I can continue to manage the whole thing and you will have no responsibility to hand over to another body.” That would be a perverse incentive against the provision of social rented housing, which is exactly the contrary of what we are trying to achieve in encouraging developers to undertake mixed developments with social rented housing as well as low-cost home ownership.
There are other potential problems. The Minister implied, in his response to my intervention on the previous group of amendments that the reason for this formulation was to do with the burden of regulation.
I have to tell him that there is real concern in the housing association movement that the Bill does not achieve a level playing field regarding the regulatory arrangements applying to the housing association sector as against the private sector. If the provision continues to apply as way formulated in clause 35, the fears that private sector providers will be subject to a less onerous and less demanding regulatory regime than housing associations will be given added force.
I sincerely hope that the Minister will reconsider the matter and accept that there is an overwhelmingly strong case to apply the provisions of clause 35 to all social housing as implied by the clause heading. I hope, in the interests of diversity and flexibility of tenure, and the need for good, integrated management and a level playing field between tenures, that he is willing to accept the amendments.

Lembit Öpik: The purpose of the Committee stage of a Bill is to seek to improve it. Sometimes we have political arguments that come down to philosophical differences of view or, indeed, party political differences of view. This is not one of those occasions, as we are talking about something that is of great logical importance if we are to maintain the consistency of the clause in the context of the Bill as a whole. I need not repeat the argument made by the right hon. Member for Greenwich and Woolwich, but it is unequivocally clear from what he has outlined that low-cost rented accommodation is a subset of social housing. As he pointed out, clauses 68, 69 and 70 underline that point and go to some lengths—especially clause 69—to explain that all three constitute the sum of what social housing means.
This is not a semantic point. I hope that the Minister accepts that the amendment is a genuine improvement to the Bill, as its argument is compelling. I see no reason why he should not accept it. The only circumstance in which the Government should refuse to accept it is if they explicitly want to exclude owner-occupied social housing from the purposes of the clause. I am sure that the Minister does not intend to do so. I suspect that this is simply a drafting omission. I hope that he will accept what is inherently a simple and straightforward improvement to the Bill.

Iain Wright: My right hon. Friend the Member for Greenwich and Woolwich and the hon. Member for Montgomeryshire have made a good case with their usual forthrightness and eloquence. The amendments are designed to replace the term “low cost rental accommodation” with the term “social housing”. Amendment No. 59 defines social housing in the same way as clause 67, as my right hon. Friend mentioned.
Clause 35, about which we have already had a bit of a debate, ensures that low-cost rental housing, whether provided directly or funded by the Homes and Communities Agency, remains in the social housing sector and has a landlord who is regulated. As I said earlier, that is necessary because of the regulatory and investment split that the Bill provides with regard to the agency and the regulator. If the landlord is a registered provider, tenants are protected by the Oftenant regulatory regime. Local authorities and arm’s length management organisations are regulated through statute and the local government performance regime involving the Audit Commission.
I listened carefully to what my right hon. Friend and the hon. Gentleman said. However, the amendments would require the HCA to ensure that homes for low-cost home ownership as well as for low-cost rental are owned by a registered provider, local authority or ALMO. That is not necessary. I return to the point that I trailed in relation to earlier amendments about the regulatory regime. My right hon. Friend made a very strong case about the need to ensure that we have a level playing field, but he will accept that low-cost home ownership requires a lighter regulatory touch than low-cost rental accommodation. We are confident that the appropriate degree of regulation for low-cost home ownership can be achieved either through the regulator or, crucially, through the agency imposing conditions on the financial assistance that it provides under clause 22.

Nick Raynsford: In the aftermath of the sub-prime market problems in the United States, and given the position of the housing market here, I am not sure that I am convinced by the argument that the provision of low-cost home ownership should be subject to a lighter regulatory regime than the provision of social rented housing.

Iain Wright: I take my right hon. Friend’s point, but what we suggest is similar to the low-cost home ownership schemes now provided under contract with the Housing Corporation.
My right hon. Friend spoke eloquently about rigidity and the fact that we want to provide mixed communities. I agree with him. The regime proposed under clause 35 provides the corporation—in future, the agency—with the flexibility to invest as it sees fit while ensuring that purchasers are protected. My right hon. Friend makes a strong case, but I should like to reflect on the matter to see whether we can address those concerns. What he said about the sub-prime market was valid, and I shall see whether we can do anything to reassure him at a later stage.

Lembit Öpik: It is obviously for the right hon. Member for Greenwich and Woolwich to decide whether that assurance is sufficient, but the Minister is taking the matter seriously. He obviously understands that if he does not accept the amendment or something similar it on Report, the Government will explicitly be excluding owner-occupied social housing from the provisions of clause 35.

Iain Wright: I understand what the hon. Gentleman says, and I appreciate the depth of feeling on the subject, as expressed by himself and by my right hon. Friend the Member for Greenwich and Woolwich.
As I said, I come to this from the starting point that, in the main, low-cost home ownership schemes need a lighter regulatory touch, but I understand the concerns that have been expressed. However, I do not want to mislead the Committee. I have explained my standpoint: a light-touch regulatory regime is appropriate, and things should be regulated through contract and the housing ombudsman. If my right hon. Friend will allow me, I shall reconsider the matter, and I therefore hope that he will withdraw the amendment.

Nick Raynsford: I am grateful to my hon. Friend for that offer. I hope that when he reflects on the matter that he will consider the importance not only of an appropriate regulatory regime for the low-cost home ownership market, but of integrated management and diversity. I hope, too, that he accepts the benefit of not creating a framework that might bring about perverse incentives that would work against the provision of social rented housing, such as the problem I cited in the example that I gave earlier. All those arguments are persuasive, and I hope that when he reflects on them, the Minister will see the case for tabling amendments broadly in line with those that I have tabled today. In the light of his undertaking, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Grant Shapps: I beg to move amendment No. 67, in clause 35, page 15, line 15, after ‘ensure’, insert ‘either’.

Joe Benton: With this it will be convenient to discuss the following amendments:
No. 68, in clause 35, page 15, line 17, at end insert
‘or that a relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
No. 69, in clause 35, page 15, line 21, after ‘condition’, insert ‘either’.
No. 70, in clause 35, page 15, line 23, at end insert
‘or that a relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
No. 71, in clause 35, page 15, line 26, after ‘ensuring’, insert ‘either’.
No. 72, in clause 35, page 15, line 28, at end insert
‘or that a relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
No. 73, in clause 35, page 15, line 31, after ‘ensuring’, insert ‘either’.
No. 74, in clause 35, page 15, line 33, at end insert
‘or that the relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.

Grant Shapps: Good morning, Mr. Benton.

Iain Wright: How is the hon. Gentleman’s hip?

Grant Shapps: Much better.
We have spent a little time discussing clause 35. The Minister knows of our concern from discussions soon after the Bill was published, and he has been constructive in his understanding and appreciation of the problematic impact that the drafting of the clause could have on the market. However, I am not convinced that the redrafting proposed in Government amendments Nos. 109 to 114 and in the amendments tabled by the right hon. Member for Greenwich and Woolwich, which are to receive further consideration, quite nail the point.
One of the difficulties of such discussions is the fact that the matter can be argued in such terribly technical terms that it would be difficult for anyone reading the Official Report to understand. We must therefore be clear about the subject of our discussion. It is my understanding that under the clause as amended, a builder, perhaps one of the Barratts of this world, who was creating a development on land owned by the HCA—that builder would normally construct a development and hand it over to a housing association to run—would, if the land continued to be owned by the HCA, have to be the landlord. There is a mix-up between the provider and the landlord, and I do not think that the clause as amended deals properly with that problem. I am certain from conversations with the Minister that that is not the Government’s intention but, none the less, it would be the outcome if the provisions were accepted in their current form.
In the spirit of co-operation displayed in relation to the previous group of amendments, will the Minister look again at the examples and reassure himself and us that the drafting will not inadvertently create a situation in which the provider and the landlord must be the same? Another obvious example would be a group trying to create one of the recently established shared ownership real estate investment trusts. It would own the stock, but would it be permissible for the housing association to end up managing it, as would normally happen, if the HCA were involved in the land deal? It seems to be the same situation as I described with the house builder, and I understand from the provisions as drafted that the answer would be no.
I do not want to labour the issue, because we have spent three quarters of an hour on it, and many relevant points have been made by my right hon. Friend the Member for North-West Hampshire and other members of the Committee, but will the Minister reassure us that he will take seriously the concern about mixing up providers and landlords, reconsider the matter and report back to the Committee later?

Iain Wright: I have a great deal of sympathy with the sentiments behind the amendment. It is probably far too early in the morning for me—I am being far too amenable for my own good—and I prefer the later sittings. The hon. Gentleman is on to something and the motivation behind the amendments is sound. He is trying to give the agency more flexibility while protecting tenants.
However, that is where it stops. I think that the hon. Gentleman will agree with me that there are certain key aspects of regulation that can fall only on the owners of the property. Regulation, as he will accept, protects public investment in social housing by requiring owners to seek disposal consent from the regulator or the Secretary of State for Communities and Local Government before selling a property. It also, for example, requires the owners of a home sold to the tenant under the right-to-acquire scheme to reinvest the proceeds through the statutory disposal proceeds fund. Those are key protections, which it is essential to maintain.
Registered providers can appoint a manager to carry out day-to-day management of their properties. The regulator can operate or approve accreditation schemes for such managers, and if a commercial developer, as the hon. Gentleman suggested, wanted to appoint a manager or indeed another registered provider to carry out that detailed work, that would be perfectly possible within the existing framework. However, the fundamental point is that the owner must still be registered to ensure that investment from the public purse is protected. So, while I am sympathetic to his concerns, I ask the hon. Gentleman to withdraw the amendment.

Grant Shapps: We are getting close to clarification. Will the Minister confirm that it is his understanding that under the clauses a developer would be able, as happens now, to use a registered social landlord—a housing association—to manage the property? He referred just now to the possibility of bringing someone in to manage the day-to-day aspects of the property. That did not sound quite the same as what he said about a housing association being brought in. Will he just confirm that the relevant format could involve a housing association?

Iain Wright: I shall try to clarify the position. The direct answer to the question about housing built by Barratt on land owned by the HCA is no: the point is that when the housing becomes low-cost rental housing, the landlord is a relevant provider. The provision does not force Barratt to register, or stop it making a transfer to a housing association. I hope that clarifies the point and reassures the hon. Gentleman. Although I have much sympathy with what he said, I hope that he will withdraw the amendment.

Grant Shapps: On that basis, and with the assurance recorded in Hansard, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 110, in clause 35, page 15, line 33, at end insert—
‘( ) For the purposes of this section, a person provides low cost rental accommodation if (and only if) the person acquires, constructs or converts any housing or other land for use as low cost rental accommodation or ensures such acquisition, construction or conversion by another.’.
No. 111, in clause 35, page 15, line 40, leave out from ‘authority’ to end of line 41 and insert
‘a county council in England or a person controlled by an English local housing authority or county council in England (and regulations under subsections (5) and (6) of section 110 apply for the purposes of this definition as they apply for the purposes of subsection (4) of that section)’.—[Mr. Wright.]

Clause 35, as amended, ordered to stand part of the Bill.

Clause 36

Recovery etc. of social housing assistance

Amendment made: No. 112, in clause 36, page 16, line 25, after ‘project)’ insert
‘; and, for the purposes of this Part, a person provides social housing if (and only if) the person acquires, constructs, converts, improves or repairs any housing or other land for use as social housing or ensures such acquisition, construction, conversion, improvement or repair by another’.—[Mr. Wright.]

Question proposed, That the clause, as amended, stand part of the Bill.

George Young: I refer the Minister to an exchange that took place on 11 December when the Council of Mortgage Lenders appeared before us and was exposed to some questioning from the Committee. In particular, I refer to column 65, which deals specifically with clause 36. Mr. Richard Hughes, the CML representative, stated:
“On our reading, clauses 36 and 37 seem to say that the HCA can demand its grant back and a return on it—we assume some sort of equity-style return.”——[Official Report, Housing and Regeneration Public Bill Committee, 11 December 2007; c. 65.]
I have to say that I did not share the CML’s concern, but I will not be lending any money. It is important that the CML is confident that the security their members have when they advance funds is such that they will continue to lend. Has there been any dialogue since that exchange on 11 December between the Minister’s Department and the CML that indicates that the organisation is no longer concerned about clause 36 and that it does not want the amendment it sent to members of the Committee but which no one tabled—a proposed new subsection (4)(c) to clause 36, which deals with the recovery of social housing assistance—and that the sort of difficulties that were envisaged in the exchange will not, in fact, occur if clause 36 goes through without its amendment?

Iain Wright: I thank the right hon. Gentleman for that line of questioning. I do not have the Hansard for 11 December in front of me, but I seem to recall from my genning up for this debate that the right hon. Gentleman was extraordinarily helpful to me in respect of this matter. I believe he realises, because I think he made the point in December, that the provisions are not, in essence, a change in policy terms or in the legal framework. He mentioned in December that the Housing Corporation operates a similar system under the Housing Act 1996, and I believe he agrees that it is not unreasonable to require repayment of more grant than had been originally understood would go unchallenged.
On the direct point about dialogue between officials and the CML, I assure the right hon. Gentleman that my officials have been discussing the matter with the organisation. The discussion is ongoing, because we are keen to reassure the CML of the nature of the clause and subsequent relevant clauses, and to ease its concerns. I believe that the dialogue has proved fruitful, and I hope that I have reassured the right hon. Gentleman in that regard.

Question put and agreed to.

Clause 36, as amended, ordered to stand part of the Bill.

Clause 37

Section 36: interest and successors in title

Question proposed, That the clause stand part of the Bill.

George Young: I am grateful to the Minister for what he just said about clause 36. It is a relief to us, and I hope that the dialogue ends with a happy resolution.
The CML also raised a specific problem with clause 37. I quote from the note that it sent to all members of the Committee:
“This section appears to pass on the requirement to repay grants...to successors in title.”
I do not think that anybody has any difficulty with that. The note goes on to state:
“If this is the case then security valuations would have to be adjusted to reflect the obligation of a successor in title to repay grant. This would mean that current registered providers could all be in breach of their loan covenants and would impact negatively on the financial capacity of registered providers going forward.”
I put the same question to the Minister as I did on clause 36: is there is a dialogue on the clause, and has his Department been able to satisfy the CML that the risks outlined in the passage that I have just read out do not exist, and that there is no impediment to its continuing to fund housing associations?

Iain Wright: Once again, I thank the right hon. Gentleman. He is right to suggest that my response will be similar to that on clause 36. He will know that the provisions of clause 37 are the same as those in the Housing Act 1988 and the Housing Act 1996. We are looking into the CML’s point about how the operation of the determinations will interact with repossessions and so on. Dialogues are ongoing between officials and the CML, and they are proving fruitful. We are trying to reassure the CML as much as we can, which is having a productive conclusion. I hope that reassures the right hon. Gentleman.

Question put and agreed to.

Clause 37 ordered to stand part of the Bill.

Clause 38

Determinations under sections 36 and 37

Grant Shapps: I beg to move amendment No. 6, in clause 38, page 17, line 25, leave out ‘as it considers appropriate’ and insert
‘before making such a determination’.
The amendment is intended to clarify some vague wording in the clause. Its purpose is to ensure that the HCA must consult bodies representing the interests of registered providers of social housing before making a determination. On page 17, clause 38(2) states:
“Before making a determination, the HCA must consult...
(b) such other persons as it considers appropriate.”
The other day we debated who “other persons” might be. It was unclear at the time, but the Minister kindly gave some clarification later in the day. “Other persons” seemed to include people other than those whom I had suggested would be included, so I would be interested to know which “other people” subsection (2)(b) refers to.
The amendment would leave out the words “as it considers appropriate” and insert
“before making such a determination”,
to remove the vagueness of the wording and tighten up the fact that there should be more specific consultation before determination under clauses 36 and 37. Who are envisaged as “other persons” in that context, and will the Minister consider tightening up the language to ensure that specific consultation must take place?

Iain Wright: I suggest to the hon. Gentleman that the amendment would not really add anything to the effect of the clause. I draw his attention to subsection (4), which states:
“The HCA must, in particular, consult such bodies appearing to it to represent the interests of registered providers of social housing as it considers appropriate.”
The amendment would leave out “as it considers appropriate”, and would thus apparently require the agency to consult all bodies representative of registered providers of social housing, rather than just those the agency considered appropriate, which would, I suggest, remove the agency’s discretion as to whom it may consult.
I know that the hon. Gentleman says that the amendment would avoid vagueness, but it would mean that the agency did not have discretion, which would increase the risk of the agency’s decisions being successfully challenged due to a failure to consult every single representative body, including those unaffected by particular determinations. That could be unwieldy and unnecessarily bureaucratic. I am sure that is not what the hon. Gentleman intended, although I understand the sentiment behind the amendment. To avoid that vagueness and ensure that the agency has a degree of discretion, I hope that he will withdraw the amendment.

Grant Shapps: I understand what the Minister says, and far be it from me to want legislation that is more cumbersome and bureaucratic than it needs to be, but I did not understand from his response who the “other persons” are. May I press him on that point?

Iain Wright: I am afraid that I shall have to disappoint the hon. Gentleman. It would depend on the particular circumstances, and it would be whoever the agency considered appropriate.

Grant Shapps: Will the Minister at least clarify who he imagines the “other people” might be?

Iain Wright: We could perhaps take a particular circumstance and then suggest who might be considered appropriate. A wide range of circumstances might be covered, and the agency needs considerable discretion when deciding who to bring forward. I, therefore, throw the question back at the hon. Gentleman: if he can suggest a particular circumstance, we could bat it about further.

Grant Shapps: I am still curious, because not a single name or organisation has been mentioned. I want to clarify whether the Minister understands the intention of the clause. The other day, it turned out that nobody in the Committee knew which persons were meant to be represented under a particular clause. It took some time, and a lunch break, to calculate the list. I should be grateful if the Minister could tell us what is meant by “such other persons”, and if he could provide us with examples of whom they might be. However, if he cannot but could undertake to find out and tell us later, I would be happy to withdraw the amendment.

Iain Wright: I am happy to do that. However, I repeat that it would be extraordinarily helpful for me, in order to provide some clarification and to reassure the hon. Gentleman, if he could suggest particular circumstances in which we might consider the proposal appropriate.

Grant Shapps: I did not draft the legislation, and it needs to be explained by those who did—the Government. It is not unreasonable to ask what a particular line in legislation means, and it is for the Minister to provide that clarification to the Committee, rather than the other way around.
 Mr. Wright rose—

Joe Benton: Order. We cannot go on like this for too long. We have reached the point when either the amendment must be pressed or withdrawn. Having said that, I shall allow the Minister to reply one more time.

Iain Wright: One of the groups that would usually be consulted is the National Housing Federation, but there would be others, too. I hope that reassures the hon. Member for Welwyn Hatfield.

Grant Shapps: I should be grateful if the Minister would send me a letter with further details about the matter, but, taking your advice, Mr. Benton, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 38 ordered to stand part of the Bill.

Clause 39 ordered to stand part of the Bill.

Clause 40

Duty to co-operate with Regulator of Social Housing

Question proposed, That the clause stand part of the Bill.

George Young: I think that clause 40 is the first part of the Bill where the regulator of social housing is mentioned. We will have a much more substantive discussion about his role later on. This is rather like Beethoven’s opera, “Fidelio”, in which the hero does not appear until the second act. However, can the Minister, who has announced the chief executive of the HCA, say anything about who the regulator is? Has he been announced? If not, how far have the Government got in the process of appointing him?
The clause states that the HCA must co-operate with the regulator. At present, the regulator and the investor share the same building. Is it envisaged that the HCA and the regulator will be co-located, or that they will be separately accommodated? Furthermore, will the Minister shed some light on clause 40(2), which states that
“the HCA must consult the regulator on matters likely to interest the regulator.”?
What does that mean? We are imposing a statutory duty on the HCA, and in fairness to it we should shed some light on what information it will be legally obliged to pass on to the regulator.

Iain Wright: The process of appointing the regulator is ongoing, but when we come to part 2 of the Bill, I might be able to update the Committee on progress. As for co-location of the agency and the regulator, that is an operational decision, but we do not intend that there should be a physical separation as well as an organisational separation.
The right hon. Gentleman’s third line of questioning was about the circumstances in which there would be co-operation between the regulator and the agency. That is crucial, because, as he rightly said, we have previously had a merging of the regulatory and investment functions. The regulator will be concerned to see that registered providers are responsive to tenants and that their businesses remain viable, because that will help to raise standards for tenants. Crucially, it will need to understand the stresses of business, particularly the ability to borrow money.
As the investing body, the agency will be also be interested in the ability to borrow money, and will need to have an understanding of such matters when making investment decisions. It would be sensible for the agency to consult the regulator when developing its investment policies to understand the overall ability of registered providers to deliver. It is in everyone’s interests to ensure that the capacity and delivery capability of the sector is advanced as much as possible. In short, a close dialogue will be needed, while the regulator should maintain a clear independence, as has been set out and universally acknowledged. I hope that reassures the right hon. Gentleman.

George Young: Does the Minister propose to codify or clarify exactly what the relationship between those two organisations should be? At the moment, the measure says simply “must consult”, and the Minister has been good enough to outline the sort of information that ought to be exchanged. Should not that be formalised in some way, so that both partners in the new relationship know exactly what they are obliged to tell the other about?

Iain Wright: Yes, the right hon. Gentleman makes a good point. We anticipate that there will be a memorandum of understanding between the agency and the regulator to codify such issues as much as possible. I hope that reassures him.

Question put and agreed to.

Clause 40 ordered to stand part of the Bill.

Clause 41

Information services

Question proposed, That the clause stand part of the Bill.

Nick Raynsford: I broadly support the purpose of the clause, which is to give the new agency powers to provide information, disseminate ideas and undertake research, thus carrying forward powers that are available to the Housing Corporation and English Partnerships. I seek guidance from my hon. Friend the Minister on whether he envisages any new areas in which research may be undertaken, information may be provided or ideas disseminated—[Interruption.]

Joe Benton: Order. The level of background noise is getting rather high.

Nick Raynsford: Thank you, Mr. Benton.
I simply seek guidance on whether there are likely to be any new areas of initiative taken by the new agency. If so, what is the thinking behind that and what are the resource implications? I understand, from our debates on Tuesday on an earlier clause, that the agency will be able to recover reasonable costs by levying charges for providing information or research. It would help to know whether that is likely to involve any expansion of the agency’s activity and, if so, in which areas.

Iain Wright: My right hon. Friend raises an interesting point. Given that there needs to be a step change in what the agency does, in comparison with its predecessor organisations, I anticipate that it will work in new fields, such as project management. I understand that English Partnerships and the Housing Corporation already have such roles, but I imagine that there will be new and innovative research on project management and perhaps communication.
We have talked about how the agency will have to have a key role—a primary role, following my response to my right hon. Friend—in facilitating, enabling, partnership working and community engagement. I do not want to box the agency in on what it does, but I imagine that as a resource hub and repository of best practice, it will help people step up to the plate and local communities to become involved in planning permission. It will also help to ensure that infrastructure projects are understood and communicated as much as possible.
In our deliberations on clause 27 my hon. Friend the Member for Luton, South mentioned concerns that work at the Housing Corporation’s centre for research and market intelligence might be restricted if the agency were to undertake it using the powers in clause 41. The HCA would be able to take on the work of the CRMI under that clause and the following one, and would not be restricted in any way by the wording of clause 41. I hope that addresses my hon. Friend’s concerns, and that I have answered my right hon. Friend’s points about how the agency will provide research.

Question put and agreed to.

Clause 41 ordered to stand part of the Bill.

Clause 42

Advice, education and training

Question proposed, That the clause stand part of the Bill.

Nick Raynsford: This is a supplementary point about the Academy for Sustainable Communities, the body that is likely to become Cinderella to the new agency unless we draw attention to it. All our discussions have been about the merging of the Housing Corporation and English Partnerships, the two big components of the new body, but the third component is the academy, which has an important role in advice, education and training—the subjects of the clause. I should be grateful if my hon. Friend the Minister could indicate the areas where the academy, in its new role as part of the agency, will address the challenges that we face, not least of appropriate skills for the achievement of the Government’s ambitious housing and regeneration targets.

Robert Syms: Over recent years, we have seen the importance of involving communities, particularly disadvantaged communities, on many of the larger estates. I am thinking of places such as Castle Vale in Birmingham, where major schemes have involved tenants and communities. Does the Minister envisage that an element of the measure could be to help train community members to be advocates for their communities and put forward what people want at grass roots, so that when there are development schemes, one is better able to drill down, there is no top-down process and the HCA does its best to involve local communities and get community members to say what their communities want in the way of redevelopment and sustainability?

Iain Wright: I am grateful to the Committee for bringing the issue to wider attention. My right hon. Friend the Member for Greenwich and Woolwich is right: although the focus has been on the establishment of the HCA due to the merger of English Partnerships and the Housing Corporation, we should not forget the vital role of the Academy for Sustainable Communities in ensuring that we have real community engagement. I am excited by what the academy does, and there is a real opportunity in the Bill to expand its work.
To touch on what my right hon. Friend said about clause 41, the academy focuses on broader generic skills, such as project management, vision, communication, partnership working and community engagement, and following my response to him on that earlier clause, I anticipate that the academy will expand its role. The academy has identified three broad areas and three major audiences on which its work programmes will focus when it becomes part of the agency. The three major audiences include young people, because it will need to capture their interest, raise their awareness of sustainable community issues and encourage them to go into sustainable community careers. Having spoken to stakeholders, I know that there is a potential skills shortage, which may affect the number of people going into sustainable community careers, such as architecture and landscaping. I know, too, that my right hon. Friend is working hard on the issue.
We must work to encourage people to have a stake in their communities and to realise that quality of life and the built environment are important. People can become productively and positively involved in their communities by taking up careers as planning surveyors, architects or landscapers. I am really excited by that work and I would like to drive it forward, certainly at ministerial level.

Margaret Moran: Does my hon. Friend envisage the expansion of some of the ideas that he has outlined? For example, I have been working closely with Ashram housing association in Birmingham, which has worked with its south Asian women tenants to ensure that they gain qualifications in design and architecture and can help to design their own homes. Such schemes give people skills and potential for employment, while dealing with issues such as sustainable communities and regeneration. I hope that the HCA will take a much more positive role in expanding such projects.

Iain Wright: I certainly hope so, too. I am pleased that my hon. Friend mentioned Ashram, because its representatives have been to see me. We talked about skilling specific diverse communities and about ensuring that in areas where black and minority ethnic communities, women and younger people are not involved in the careers that I mentioned they step up to the plate to ensure that they become involved. That is vital, so I am really encouraged and excited by what is going on and I want to see those things go forward. The academy is really good and will make still more progress when it is in the agency.

Nick Hurd: Of course, the Bill is not the only opportunity for the Academy for Sustainable Communities to expand now that the Sustainable Communities Act 2007 is on the statute book. As the promoter of the private Member’s Bill that led to the Act, I am obviously delighted to support the academy’s expansion. May I press the Minister a little further, however, on what expansion means in this context? How much more financial assistance will the Government put into that expansion?

Iain Wright: That will be an operational decision for the agency’s chief executive and senior management. The clear expectation is that the agency will help people to realise what they can do to promote sustainable communities. In that respect, I pay tribute to what the hon. Gentleman did in the 2007 Act. However, if the agency is really to step up to the plate to ensure that communities are engaged and that potential barriers to housing growth and community infrastructure are identified, addressed and resolved, the academy will need to play a bigger role. That is what I mean by expansion.
I have mentioned young people and potential skills shortages, but let me also mention professionals because the professional bodies have a role to play. The academy has identified the need to target professionals and deliver a co-ordinated programme of integrated learning and skills training to those working in sustainable communities. That will improve their skills and awareness and ensure that future generations are attracted to the relevant professions and that those working in them are excited by them and want to move forward still further. Again, this is a real opportunity, and I am really excited by it.
The third strand of the work programme identified by the academy relates directly to the point made by the hon. Member for Poole about community leaders. The academy wants to raise awareness and understanding of sustainable community issues among community leaders and to support the building of the capacity and capability to deliver on those issues.
From what I have heard, the whole Committee is really excited, as I am, about the Academy for Sustainable Communities. As John F. Kennedy said,
“Ask not what your country can do for you; ask what you can do for your country”,
and the academy will be doing that on a sustainable community level. It is really exciting that people can make an impact in their area by using architects, landscapers and planning surveyors to raise standards and quality of life, and that planning and design, which we mentioned on earlier clauses, can play a central role. Through the agency, the academy will be able to ensure that that happens. I have been encouraged by our debate, as I hope other hon. Members have been, and I hope that they will be attracted to stuff that is going on in their constituencies and will ensure that the agency plays a part across the country.

Question put and agreed to.

Clause 42 ordered to stand part of the Bill.

Clause 43

Guidance

Question proposed, That the clause stand part of the Bill.

Lembit Öpik: I notice that the Minister has resorted to quoting John F. Kennedy, which is appropriate because the Bill has such a wide remit that technically it could organise a moon landing and not go beyond the limits of its involvement.

Iain Wright: I think we need a debate on whether the agency will be a direct provider of the moon launch, because I know that the hon. Gentleman is interested in space and asteroids. Would it help to facilitate that moon landing, or would it be a direct provider?

Lembit Öpik: My understanding from our previous debate is that the agency would be able to operate the rocket as long as it was rented. If the rocket were bought, the agency would have to get someone else to look after it. Although I am not asking to do so, if called upon by the nation I would be happy to offer my services and perhaps knock a few asteroids out of the way in the process.
In a more mundane context, I have a simple question about the guidance that the HCA can give
“to such persons as it considers appropriate about any matters relating to its objects.”
Clauses 48 and 49 make it clear that there is a difference between guidance and directions. Although those clauses relate to the Secretary of State, presumably there is some distinction between guidance and directions. Due to my inexperience of my portfolio there may be a standard answer that I do not know, but will the Minister clarify the matter? How binding is the guidance that the HCA gives? Is it mandatory, or is it, within the more conventional meaning of the word, exactly that—guidance and advice? I hope the question makes sense to the Minister, and that he can provide some clarification.

Nick Raynsford: My question to the Minister is on a different tack. I assume that the main purpose of clause 43 is to allow the agency to give guidance to providers and others involved in the provision of social housing and regeneration in the way that both the Housing Corporation and English Partnerships do at present.
Within the current arrangements, another area has always been problematic: the relationship between the regulatory function of the Housing Corporation and its investment function. The question has always been how to maintain a proper distinction between those two functions, but without allowing nonsense to develop whereby the investment side puts money into an organisation that is subject to concern from the regulatory side. That will be part of the framework under the new arrangements whereby the regulator will be a different body from the funder and there will at times be questions about whether it is sensible for regulatory action to be taken in respect of an organisation that is seen to be in difficulty.
We know that in general the record over the past 30 years or so has been good in terms of successful housing associations. When problems have arisen, the Housing Corporation has been able to intervene and the problems have generally been overcome without loss of public money or threat to tenants. However, as the recent case involving Ujima housing association highlighted, unhappy circumstances can rapidly develop in which an association that had previously been regarded as a safe recipient of investment finance may seem to be getting into financial difficulties or to be acting not entirely properly in its financial decisions, and regulatory intervention may become necessary. In the Ujima case, questions were asked about whether action was taken early enough when the first warning signals appeared about the organisation not performing as well as it should. My question is: does guidance in clause 43 extend to guidance being issued by the agency to the regulator in such circumstances?
It will be essential to have a clear understanding and a mechanism to ensure the sharing of information between the two bodies, where there are doubts about the performance of individual bodies, and where regulatory action may be necessary. If it is not provided under this part of the Bill, where will arrangements be defined to ensure that there can be a proper and appropriate system for sharing information between the agency and the regulator in such circumstances?

Andrew George: I launched the probing contributions made so far. Indeed my hon. Friend the Member for Montgomeryshire launched a space probe a moment ago. I was not quite sure which planet he was coming from, but I was reassured because in the end it was a very thoughtful contribution.

Lembit Öpik: You are supposed to be on my side.

Andrew George: Just to reassure my hon. Friend, I fully support him.
Presumably, the HCA will be giving guidance to RSLs and others—local authorities and so forth. Chapter 5 refers to guidance and direction from the Secretary of State. To what extent will the HCA be expected to offer formal guidance to Government agencies, to the Treasury and the Secretary of State? That is not clear, so perhaps the Minister could point out where it is formally provided for in the Bill?
We have noted that the HCA produces an annual report. A lot of bodies that provide housing—RSLs for example—will be making representations to Government, and they would be greatly strengthened if the HCA itself endorsed the concerns of those agencies. An example is the manner in which stamp duty applies to shared equity properties. In many parts of the country when such a property is purchased, the contribution of the occupant is well below stamp duty level but they still have to pay stamp duty because the value of the whole property is above the stamp duty threshold. In those circumstances, and given the fact that it is not open market housing, I hope that the HCA would support social housing providers by endorsing that concern. The Government need to address the anomaly whereby people they and the HCA are attempting to support through low-cost shared equity properties are penalised by having to pay stamp duty. In that instance, it would be appropriate for the HCA to make representations not just to the Secretary of State but to the Treasury itself. Can the Minister reassure us that it would be a right and proper thing for the HCA to do?

Iain Wright: I am grateful to Members for that interesting line of questioning. On the point raised by the hon. Member for Montgomeryshire about whether the word guidance is to be understood in the conventional sense, I reassure him that guidance is guidance.
It might be helpful if I set out what sort of guidance we expect the agency to provide. It could provide guidance on anything relating to its objects and we have discussed at length improving the supply and quality of housing, regeneration and community development. The sort of guidance the agency might issue could be similar to what English Partnerships and the Housing Corporation have been doing. For example, in relation to its investment functions, the Housing Corporation issues a piece of main guidance called the capital funding guide, designed to help registered social landlords understand the procedures and requirements relating to capital grant.

It beingtwenty-five minutes past Ten o’clock,The Chairmanadjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at One o’clock.